(b)the new shares are issued after the end of three years beginning with the day on which the original shares were acquired,

(c)before issuing the new shares, the company had issued 5shares which met conditions A and B of section 257L of ITA 2007, and

(d)the company issued a compliance certificate in relation to those earlier shares for the purposes of section 257PA(1) of ITA 2007 and in accordance with sections 257PB and 257PC 10of ITA 2007.

(7)In subsection (6) “new holding” is to be construed in accordance with sections 126, 127, 135 and 136.

(8)In this section—

“ordinary share capital” has the meaning given in section 989 of 15ITA 2007;

“ordinary shares”, in relation to a company, means shares forming part of its ordinary share capital.”

3Before Schedule 9 insert—

Section 255A

“Schedule 8BHold-over relief for gains re-invested in social enterprises

20When does the Schedule apply?

1(1)This Schedule applies if—

(a)a chargeable gain accrues to an individual (“the investor”),

(b)the investor acquires one or more assets (“the social holding”),

(c)25the investor is eligible for SI relief under Part 5B of ITA 2007 in respect of the consideration given for the social holding, and

(d)conditions A, B, C, D and E are met.

(2)Condition A is that the gain is one that accrues—

(a)30on the disposal by the investor of an asset,

(b)in accordance with section 169N (but see sub-paragraph (7)), or

(c)as a result of the operation of paragraph 5 in connection with a chargeable event within paragraph 6(1)(c) or (d).

(3)35Condition B is that the gain is one that accrues—

(a)on or after 6 April 2014, and

(b)before 6 April 2019 (but see sub-paragraph (8)).

(4)Condition C is that the investor is resident in the United Kingdom—

(a)40when the gain accrues, and

(b)when the social holding is acquired.

(5)Condition D is that the social holding is acquired by the investor on the investor’s own behalf.

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(6)Condition E is that the social holding is acquired—

(a)in the 3 years beginning with the day when the gain accrues, or

(b)in the year that ends at the beginning of that day.

(7)5The reference in sub-paragraph (2)(b) to a gain accruing in accordance with section 169N does not include such a gain so far as it is chargeable to capital gains tax at the rate in section 169N(3) (rate where entrepreneurs’ relief is available).

(8)The Treasury may by order substitute a later date for the date for 10the time being specified in sub-paragraph (3)(b).

2(1)This Schedule also applies if—

(a)a chargeable gain accrues to an individual (“the investor”),

(b)the gain accrues as a result of the operation of paragraph 5 in connection with a chargeable event within paragraph 156(1)(a), (b) or (c),

(c)the chargeable event is either—

(i)a disposal to a social enterprise of shares in or debentures of the social enterprise, or

(ii)the cancellation, extinguishment, redemption or 20repayment by a social enterprise of shares in or debentures of the social enterprise,

(d)as part of the chargeable event or in connection with it, and in place of the shares or debentures, the investor acquires one or more assets (“the social holding”) from the social 25enterprise,

(e)other than the investor’s ceasing to hold the shares or debentures, no detriment is suffered in return for the acquisition of the social holding,

(f)the asset acquired, or each of the assets acquired, is a share 30in or debenture of the social enterprise,

(g)but for section 257LA of ITA 2007 (consideration for acquisition must be wholly in cash and fully paid) the investor would be eligible for SI relief under Part 5B of ITA 2007 in respect of the consideration given for the social 35holding, and

(h)conditions F, G, H and J are met.

(2)Condition F is that the gain is one that accrues—

(a)on or after 6 April 2014, and

(b)before 6 April 2019 (but see sub-paragraph (6)).

(3)40Condition G is that the investor is resident in the United Kingdom—

(a)when the gain accrues, and

(b)when the social holding is acquired.

(4)Condition H is that the social holding is acquired by the investor 45on the investor’s own behalf.

(5)Condition J is that the social holding is acquired—

(a)in the 3 years beginning with the day when the gain accrues, or

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(b)in the year that ends at the beginning of that day.

(6)The Treasury may by order substitute a later date for the date for the time being specified in sub-paragraph (2)(b).

(7)In this paragraph “debenture” includes any instrument creating or 5acknowledging indebtedness.

Interpretation of Schedule

3(1)In the following provisions of this Schedule—

“the amount invested” means, in a case where this Schedule applies because of paragraph 1, the consideration 10mentioned in paragraph 1(1)(c),

“the original gain” means the chargeable gain mentioned in paragraph 1(1)(a) or, as the case may be, paragraph 2(1)(a), 15and

“the social holding” means the asset or assets mentioned in paragraph 1(1)(b) or, as the case may be, paragraph 2(1)(d).

(2)In this Schedule, a “disposal within marriage or civil partnership” is a disposal to which section 58 (certain disposals between 20spouses or civil partners) applies.

Claim to hold gain over while invested in a social enterprise

4(1)The investor may make a claim for the original gain to be reduced—

(a)in a case within paragraph 1, by the amount invested, or by 25a part of that amount specified in the claim, or

(b)in a case within paragraph 2, to the extent specified in the claim,

but, in either case, subject as follows.

(2)The reduction may not be more than the original gain or, if the 30original gain has already been reduced under one or more of the listed provisions, the reduction may not be more than the reduced gain.

(3)In a case within paragraph 1, the claim may not relate to any part of the amount invested that under any of the listed provisions has 35already been set against a chargeable gain.

(4)The “listed provisions” are—

(a)sub-paragraph (1),

(b)Schedule 5B, and

(c)paragraph 1(5) of Schedule 5BB.

(5)40The total of all reductions claimed by the investor under sub-paragraph (1) in any tax year must not be more than £1,000,000.

(6)If there is relief by way of a reduction under sub-paragraph (1) then, for the purposes of this Schedule, that relief—

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(a)is attributable to the asset or assets that form the social holding, but

(b)ceases to be attributable to any particular asset, or to any particular part of a particular asset, when—

(i)5a chargeable event occurs in relation to that asset or part, or

(ii)the person holding the asset or part dies.

Held-over gain treated as accruing on disposal etc of the qualifying investment

5(1)This paragraph applies if there has been a reduction under 10paragraph 4(1).

(2)A chargeable gain equal to the amount of the reduction is treated as accruing when a chargeable event occurs in relation to the social holding without any chargeable event having previously occurred in relation to any of the holding.

(3)15When a chargeable event occurs in relation to part only of the social holding without any chargeable event having previously occurred in relation to any of that part, a chargeable gain calculated in accordance with sub-paragraph (4) is treated as accruing.

(4)20The calculation is—

Step 1

Subtract from the amount of the reduction any chargeable gains previously treated as accruing as a result of the operation of sub-paragraph (3).

25Step 2

Attribute a proportionate part of the amount calculated at Step 1 to each part of the social holding held, immediately before the occurrence of the chargeable event in question, by the investor or a person who has acquired any part of the holding from the 30investor on a disposal within marriage or civil partnership.

Step 3

Chargeable events

6(1)A chargeable event occurs in relation to an asset that forms the whole or any part of the social holding if (after the acquisition of 35the holding)—

(a)the investor disposes of the asset otherwise than by way of a disposal within marriage or civil partnership,

(b)the asset is disposed of, otherwise than by way of a disposal to the investor, by a person who acquired the 40asset on a disposal made within marriage or civil partnership,

(c)the asset is cancelled, extinguished, redeemed or repaid, or

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(d)any of the conditions in Chapters 3 and 4 of Part 5B of ITA 2007 for the investor’s eligibility for SI relief under that Part in respect of the amount invested fails to be met.

In this sub-paragraph “asset” includes part of an asset.

(2)5In the event of the death of—

(a)the investor, or

(b)a person who, on a disposal within marriage or civil partnership, has acquired the whole or any part of the social holding,

10nothing which occurs at or after the time of death is a chargeable event in relation to any part of the holding held by the deceased person immediately before the time of death.

(3)If a person makes a disposal of assets of a particular class while retaining other assets of that class—

(a)15assets of that class acquired by the person on an earlier day are treated for the purposes of this Schedule as disposed of before assets of that class acquired by the person on a later day, and

(b)assets of that class acquired by the person on the same day 20are treated for the purposes of this Schedule as disposed of in the following order—

(i)first, any to which neither relief under this Schedule, nor SI relief under Part 5B of ITA 2007, is attributable,

(ii)25next, any to which relief under this Schedule, but not SI relief under that Part, is attributable,

(iii)next, any to which SI relief under that Part, but not relief under this Schedule, is attributable, and

(iv)finally, any to which both SI relief under that Part, 30and relief under this Schedule, are attributable.

(4)For the purposes of sub-paragraph (3), assets—

(a)to which relief under this Schedule is attributable, and

(b)which have not been held continuously by the investor since the social holding was acquired,

35are treated as having been acquired when the social holding was acquired if SI relief under Part 5B of ITA 2007 is not also attributable to them.

(5)For the purposes of sub-paragraph (3), assets—

(a)to which SI relief under Part 5B of ITA 2007 is attributable, 40and

(b)which were transferred to an individual as mentioned in section 257T of ITA 2007 (transfers between spouses or civil partners),

are treated as having been acquired when the social holding was 45acquired.

(6)Chapter 1 of Part 4 of this Act has effect subject to sub-paragraphs (3) to (5).

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(7)Sections 104, 105 and 106A do not apply to assets to which relief under this Schedule is attributable if SI relief under Part 5B of ITA 2007 is not also attributable to them.

(8)Where, at the time of a chargeable event, an asset that formed the 5whole or any part of the social holding is treated for the purposes of this Act as represented by assets which consist of or include assets other than that asset—

(a)so much of the original gain as is attributable to the asset is treated, in determining for the purposes of this paragraph 10the amount of the original gain to be treated as attributable to each of those assets, as apportioned in such manner as may be just and reasonable between those assets, and

(b)as between different assets treated as representing the same asset, sub-paragraphs (3) to (5) apply with the 15necessary modifications in relation to those assets as they would apply in relation to the asset.

(9)In order to determine, for the purposes of sub-paragraph (8), the amount of the original gain attributable to any asset, a proportionate part of the amount of the original gain is to be 20attributed to each asset that forms the whole or any part of so much of the social holding as is held, immediately before the occurrence of the chargeable event in question, by the investor or a person who has acquired any part of the social holding from the investor on a disposal within marriage or civil partnership.

(10)25In subsections (8) and (9) references to the original gain are to so much of the original gain as remains after deduction from it of the amount of any chargeable gain treated as accruing as a result of the previous operation of paragraph 5.

Person to whom held-over gain is treated as accruing

7(1)30This paragraph applies where a chargeable gain is treated as accruing as a result of the operation of paragraph 5.

(2)If the chargeable event is a disposal, that chargeable gain is treated as accruing to the person who makes the disposal.

(3)If the chargeable event occurs—

(a)35when an asset, or part of an asset, is cancelled, extinguished, redeemed or repaid, or

(b)when a condition, for eligibility for relief in respect of the consideration given for the acquisition of an asset, fails to be met,

40that chargeable gain is treated as accruing to the person who holds the asset, or part, when the chargeable event occurs.

Claims: procedure

8(1)Sections 257P(1), 257PA(1) and 257PB to 257PD of ITA 2007—

(a)apply in relation to a claim under this Schedule in respect 45of the social holding as they apply in relation to a claim under Part 5B to ITA 2007 in respect of an investment, and

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(b)as they so apply, have effect as if any reference to the requirements for relief under that Part were a reference to the conditions for the application of this Schedule.

(b)onshore ring fence losses that could be deducted under section 37 (relief for trade losses against total profits) or section 42 (ring fence trades: further extension of period for relief) from ring fence profits of earlier periods,

(c)5onshore ring fence losses incurred in earlier periods that fall to be used under section 45 (carry forward of trade loss against subsequent trade profits) to reduce profits of succeeding periods, and

(d)unrelieved group ring fence profits.

10Application and interpretation

329BQualifying companies

(1)This Chapter applies in relation to any company which—

(a)carries on a ring fence trade, or

(b)is engaged in any activities with a view to carrying on a ring 15fence trade.

(2)In this Chapter such a company is referred to as a “qualifying company”.

329DAccounting periods and straddling periods

“the commencement period” means the accounting period in which the company sets up and commences its ring fence trade,

“post-commencement period” means an accounting period 30ending on or after 5 December 2013—

(a)

which is the commencement period, or

(b)

which ends after the commencement period, and

“pre-commencement period” means an accounting period ending—

(a)

35on or after 5 December 2013, and

(b)

before the commencement period.

(2)For the purposes of this Chapter, a company not within the charge to corporation tax which incurs any expenditure is to be treated as having such accounting periods as it would have if—

(a)40it carried on a trade consisting of the activities in respect of which the expenditure is incurred, and

(b)it had started to carry on that trade when it started to carry on the activities in the course of which the expenditure is incurred.

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(3)In this Chapter, “straddling period” means an accounting period beginning before and ending on or after 5 December 2013.

329EThe relevant percentage

(1)For the purposes of this Chapter, the relevant percentage for an 5accounting period is 10%.

(2)The Treasury may by order vary the percentage for the time being specified in subsection (1) for such accounting periods as may be specified in the order.

329FRestrictions on accounting periods for which additional supplement 10may be claimed

(1)A company may claim additional supplement under this Chapter in respect of no more than 4 accounting periods.

(2)The accounting periods in respect of which claims are made need not be consecutive.

(3)15The additional supplement under this Chapter—

(a)is additional to any supplement allowed under Chapter 5, but

(b)may only be claimed for accounting periods which fall after 6 accounting periods for which supplement is allowed as a 20result of claims by the company under Chapter 5.

329GQualifying pre-commencement onshore expenditure

(1)For the purposes of this Chapter, expenditure is “qualifying pre-commencement onshore expenditure” if it meets Conditions A to D.

(2)Condition A is that the expenditure is incurred on or after 5 25December 2013.

(3)Condition B is that the expenditure is incurred in the course of oil extraction activities which are onshore oil-related activities.

(4)Condition C is that the expenditure is incurred by a company with a view to carrying on a ring fence trade, but before the company sets 30up and commences that ring fence trade.

(5)Condition D is that the expenditure—

(a)is subsequently allowable as a deduction in calculating the profits of the ring fence trade for the commencement period (whether or not any part of it is so allowable for any post-35commencement period), or

(b)is relevant R&D expenditure incurred by an SME.

(6)For the purposes of this section, expenditure incurred by a company is “relevant R&D expenditure incurred by an SME” if—

(a)the company makes an election under section 1045 of CTA 402009 (alternative treatment for pre-trading expenditure: deemed trading loss) in respect of that expenditure, but

(b)the company does not make a claim for an R&D tax credit under section 1054 of that Act in respect of that expenditure.

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(7)In the case of any qualifying pre-commencement onshore expenditure which is relevant R&D expenditure incurred by an SME, the amount of that expenditure is treated for the purposes of this Chapter as being equal to 150% of its actual amount.

(8)5In the case of any qualifying pre-commencement onshore expenditure which is relevant R&D expenditure incurred by a large company, the amount of that expenditure is treated for the purposes of this Chapter as being equal to 125% of its actual amount.

329HUnrelieved group ring fence profits

In this Chapter “unrelieved group ring fence profits” has the same meaning as in Chapter 5 (see sections 313 and 314).

15Pre-commencement additional supplement

329IAdditional supplement in respect of a pre-commencement accounting period

(1)If—

(a)a qualifying company incurs qualifying pre-commencement 20onshore expenditure in respect of a ring fence trade, and

(b)the expenditure is incurred before the commencement period,

the company may claim additional supplement under this section (“pre-commencement additional supplement”) in respect of one or 25more pre-commencement periods.

This is subject to section 329F(3)(b).

This is subject to section 329F(3)(b).

(2)Any pre-commencement additional supplement allowed on a claim in respect of a pre-commencement period is to be treated as 30expenditure—

(a)which is incurred by the company in the commencement period, and

(b)which is allowable as a deduction in calculating the profits of the ring fence trade for that period.

(3)35The amount of the additional supplement for any pre-commencement period in respect of which a claim under this section is made is the relevant percentage for that period of the reference amount for that period.

(4)Sections 329J to 329M have effect for the purpose of determining the 40reference amount for a pre-commencement period.

(5)If a pre-commencement period is a period of less than 12 months, the amount of the additional supplement for the period (apart from this subsection) is to be reduced proportionally.

(6)Any claim for pre-commencement additional supplement in respect 45of a pre-commencement period must be made as a claim for the commencement period.